Question 1

-What can lead to the shift illustrated in the figure above?

Accepted Answer

A decrease in the money wage r

Question 2

-In the above figure, illustrate the effect on the AS curve from an increase in the money price of a key resource such as oil.

Accepted Answer

@#IMG-DLM& An increase in the money price of a key

Question 3

A change in any component of aggregate demand creates a larger change in overall aggregate demand.This is the ________ effect, and it means , for example, that a ________ in consumption will cause an even larger ________ in AD.

Accepted Answer

A)  multiplier; increase; decrease 
B)  liquidity; decrease; decrease 
C)  growth; increase; decrease 
D)  multiplier; decrease; decrease 
E)  liquidity; increase; decrease 
A)  multiplier; increase; decrease 
B)  liquidity; decrease; decrease 
C)  growth; increase; decrease 
D)  multiplier; decrease; decrease 
E)  liquidity; increase; decrease

Question 4

An increase in technology ________ potential GDP and ________ aggregate supply.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
E)  does not change; does not change 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; increases 
D)  decreases; decreases 
E)  does not change; does not change

Question 5

Moving along the potential GDP line, the money wage rate changes by the same percentage as the change in the price level so that the real wage rate

Accepted Answer

A)  increases. 
B)  decreases. 
C)  stays at the full-employment equilibrium level. 
D)  might either increase or decrease. 
E)  stays the same, though not necessarily at the full-employment equilibrium level. 
A)  increases. 
B)  decreases. 
C)  stays at the full-employment equilibrium level. 
D)  might either increase or decrease. 
E)  stays the same, though not necessarily at the full-employment equilibrium level.

Question 6

During 2010, a country reports that its price level fell and the money wage rate did not change.These changes lead to

Accepted Answer

A)  a higher real wage rate, lower profits, and a decrease in the quantity of real GDP supplied. 
B)  a higher real wage rate, higher profits, and an increase in the quantity of real GDP supplied. 
C)  a lower real wage rate, lower profits, and a decrease in the quantity of real GDP supplied. 
D)  a lower real wage rate, higher profits, and an increase in the quantity of real GDP supplied. 
E)  no change in the real wage rate and an increase in aggregate demand. 
A)  a higher real wage rate, lower profits, and a decrease in the quantity of real GDP supplied. 
B)  a higher real wage rate, higher profits, and an increase in the quantity of real GDP supplied. 
C)  a lower real wage rate, lower profits, and a decrease in the quantity of real GDP supplied. 
D)  a lower real wage rate, higher profits, and an increase in the quantity of real GDP supplied. 
E)  no change in the real wage rate and an increase in aggregate demand.

Question 7

When the quantity of real GDP demanded exceeds the quantity of real GDP supplied, firms

Accepted Answer

A)  increase production and prices. 
B)  decrease production and prices. 
C)  increase production and lower prices. 
D)  decrease production and increase prices. 
E)  do not change production because aggregate demand and potential GDP will adjust. 
A)  increase production and prices. 
B)  decrease production and prices. 
C)  increase production and lower prices. 
D)  decrease production and increase prices. 
E)  do not change production because aggregate demand and potential GDP will adjust.

Question 8

As the money wage rate increases,

Accepted Answer

A)  potential GDP increases. 
B)  potential GDP decreases. 
C)  aggregate supply increases. 
D)  aggregate supply decreases. 
E)  aggregate supply and potential GDP do not change. 
A)  potential GDP increases. 
B)  potential GDP decreases. 
C)  aggregate supply increases. 
D)  aggregate supply decreases. 
E)  aggregate supply and potential GDP do not change.

Question 9

Which of the following could lead to a recessionary gap?

Accepted Answer

A)  a fall in the price level 
B)  a tax increase 
C)  a fall in money wages 
D)  an increase in expected income 
E)  an increase in foreign incomes 
A)  a fall in the price level 
B)  a tax increase 
C)  a fall in money wages 
D)  an increase in expected income 
E)  an increase in foreign incomes

Question 10

When the price level rises there is a ________ the aggregate demand curve.

Accepted Answer

A)  rightward shift of 
B)  movement down along 
C)  leftward shift of 
D)  movement up along 
E)  rotation of 
A)  rightward shift of 
B)  movement down along 
C)  leftward shift of 
D)  movement up along 
E)  rotation of

Question 11

If potential GDP increases, then the

Accepted Answer

A)  aggregate supply curve shifts leftward. 
B)  aggregate supply curve shifts rightward. 
C)  real wage rate increases. 
D)  real wage rate falls. 
E)  aggregate demand curve shifts rightward. 
A)  aggregate supply curve shifts leftward. 
B)  aggregate supply curve shifts rightward. 
C)  real wage rate increases. 
D)  real wage rate falls. 
E)  aggregate demand curve shifts rightward.

Question 12

If taxes are cut, there is

Accepted Answer

A)  an increase in aggregate demand and the AD curve shifts rightward. 
B)  a decrease in aggregate demand and the AD curve shifts leftward. 
C)  an increase in the quantity of real GDP demanded and a movement up along the AD curve. 
D)  a decrease in the quantity of real GDP demanded and a movement down along the AD curve. 
E)  no change in aggregate demand, only a change in potential GDP. 
A)  an increase in aggregate demand and the AD curve shifts rightward. 
B)  a decrease in aggregate demand and the AD curve shifts leftward. 
C)  an increase in the quantity of real GDP demanded and a movement up along the AD curve. 
D)  a decrease in the quantity of real GDP demanded and a movement down along the AD curve. 
E)  no change in aggregate demand, only a change in potential GDP.

Question 13

If real GDP is less than potential GDP, what type of gap is the economy experiencing?

Accepted Answer

When real GDP is les

Question 14

If the price level rises but the money wage rate does not, then firms will hire ________ labor and the quantity of real GDP supplied will ________.

Accepted Answer

A)  more; increase 
B)  the same amount of; not change 
C)  less; decrease 
D)  more; not change 
E)  less; increase 
A)  more; increase 
B)  the same amount of; not change 
C)  less; decrease 
D)  more; not change 
E)  less; increase

Question 15

Reasons that the recession of 2008-2009 did not become a depression include i. The Fed bailed out troubled financial institutions
Ii) The government aggressively balanced its budget
Iii) The government increased its expenditures, which increased aggregate demand

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i and ii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i and ii

Question 16

What are the two channels through which the world economy can affect U.S.aggregate demand?
 State what changes in the world economy can increase U.S.aggregate demand.

Accepted Answer

The world economy can affect aggregate d

Question 17

Moving along the potential GDP line, when the price level changes, the i. real wage rate stays at the full-employment equilibrium level.
Ii) money wage rate changes by the same percentage.
Iii) money prices of non-labor resources change by the same percentage.

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and ii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and ii 
E)  i, ii, and iii

Question 18

Suppose the exchange rate in the year 2010 was 4 yuan per dollar and in 2011 the exchange rate fell to 3 yuan per dollar.If the price of a Chinese sweater was 120 yuan in both years, the new dollar price in 2011 would be ________ and imports of Chinese sweaters would ________.

Accepted Answer

A)  $40; increase 
B)  $30; decrease 
C)  $40; decrease 
D)  $30; increase 
E)  $40; stay the same because the price stayed the same at 120 yuan 
A)  $40; increase 
B)  $30; decrease 
C)  $40; decrease 
D)  $30; increase 
E)  $40; stay the same because the price stayed the same at 120 yuan

Question 19

A fall in the price level produces a ________ the aggregate supply curve.

Accepted Answer

A)  rightward shift of 
B)  movement downward along 
C)  leftward shift of 
D)  movement upward along 
E)  rightward shift of the aggregate supply curve and a movement downward along 
A)  rightward shift of 
B)  movement downward along 
C)  leftward shift of 
D)  movement upward along 
E)  rightward shift of the aggregate supply curve and a movement downward along

Question 20

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Price level } \
\text { (GDP deflator) }
\end{array} & \begin{array} { c } 
\text { Potential GDP } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP supplied } \
\text { (billions of 2005 dollars) }
\end{array} & \begin{array} { c } 
\text { Real GDP demanded } \
\text { (billions of 2005 dollars) }
\end{array} \
\hline 150 & 25 & 34 & 16 \
140 & 25 & 31 & 19 \
130 & 25 & 28 & 22 \
120 & 25 & 25 & 25 \
110 & 25 & 23 & 28 \
\hline
\end{array}$$
-The table above gives data for the nation of Pearl, a small island in the South Pacific.If a supply shock decreases the quantity of real GDP supplied by $6 billion at each price level, the new equilibrium real GDP is

Accepted Answer

A)  $16 billion. 
B)  $19 billion. 
C)  $22 billion. 
D)  $23 billion. 
E)  $17 billion. 
A)  $16 billion. 
B)  $19 billion. 
C)  $22 billion. 
D)  $23 billion. 
E)  $17 billion.

-What can lead to the shift illustrated in the figure above?

-In the above figure, illustrate the effect on the AS curve from an increase in the money price of a key resource such as oil.

A change in any component of aggregate demand creates a larger change in overall aggregate demand.This is the effect, and it means , for example, that a in consumption will cause an even larger in AD.

An increase in technology potential GDP and aggregate supply.

Moving along the potential GDP line, the money wage rate changes by the same percentage as the change in the price level so that the real wage rate

During 2010, a country reports that its price level fell and the money wage rate did not change.These changes lead to

When the quantity of real GDP demanded exceeds the quantity of real GDP supplied, firms

As the money wage rate increases,

Which of the following could lead to a recessionary gap?

When the price level rises there is a ________ the aggregate demand curve.

If potential GDP increases, then the

If taxes are cut, there is

If real GDP is less than potential GDP, what type of gap is the economy experiencing?

If the price level rises but the money wage rate does not, then firms will hire labor and the quantity of real GDP supplied will .

Reasons that the recession of 2008-2009 did not become a depression include i. The Fed bailed out troubled financial institutions Ii) The government aggressively balanced its budget Iii) The government increased its expenditures, which increased aggregate demand

What are the two channels through which the world economy can affect U.S.aggregate demand? State what changes in the world economy can increase U.S.aggregate demand.

Moving along the potential GDP line, when the price level changes, the i. real wage rate stays at the full-employment equilibrium level. Ii) money wage rate changes by the same percentage. Iii) money prices of non-labor resources change by the same percentage.

Suppose the exchange rate in the year 2010 was 4 yuan per dollar and in 2011 the exchange rate fell to 3 yuan per dollar.If the price of a Chinese sweater was 120 yuan in both years, the new dollar price in 2011 would be and imports of Chinese sweaters would .

A fall in the price level produces a ________ the aggregate supply curve.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 13: Aggregate Supply and Aggregate Demand

-What can lead to the shift illustrated in the figure above?

-In the above figure, illustrate the effect on the AS curve from an increase in the money price of a key resource such as oil.

A change in any component of aggregate demand creates a larger change in overall aggregate demand.This is the ________ effect, and it means , for example, that a ________ in consumption will cause an even larger ________ in AD.

An increase in technology ________ potential GDP and ________ aggregate supply.

Moving along the potential GDP line, the money wage rate changes by the same percentage as the change in the price level so that the real wage rate

During 2010, a country reports that its price level fell and the money wage rate did not change.These changes lead to

When the quantity of real GDP demanded exceeds the quantity of real GDP supplied, firms

As the money wage rate increases,

Which of the following could lead to a recessionary gap?

When the price level rises there is a ________ the aggregate demand curve.

If potential GDP increases, then the

If taxes are cut, there is

If real GDP is less than potential GDP, what type of gap is the economy experiencing?

If the price level rises but the money wage rate does not, then firms will hire ________ labor and the quantity of real GDP supplied will ________.

Reasons that the recession of 2008-2009 did not become a depression include i. The Fed bailed out troubled financial institutions Ii) The government aggressively balanced its budget Iii) The government increased its expenditures, which increased aggregate demand

What are the two channels through which the world economy can affect U.S.aggregate demand? State what changes in the world economy can increase U.S.aggregate demand.

Moving along the potential GDP line, when the price level changes, the i. real wage rate stays at the full-employment equilibrium level. Ii) money wage rate changes by the same percentage. Iii) money prices of non-labor resources change by the same percentage.

Suppose the exchange rate in the year 2010 was 4 yuan per dollar and in 2011 the exchange rate fell to 3 yuan per dollar.If the price of a Chinese sweater was 120 yuan in both years, the new dollar price in 2011 would be ________ and imports of Chinese sweaters would ________.

A fall in the price level produces a ________ the aggregate supply curve.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

A change in any component of aggregate demand creates a larger change in overall aggregate demand.This is the effect, and it means , for example, that a in consumption will cause an even larger in AD.

An increase in technology potential GDP and aggregate supply.

If the price level rises but the money wage rate does not, then firms will hire labor and the quantity of real GDP supplied will .

Suppose the exchange rate in the year 2010 was 4 yuan per dollar and in 2011 the exchange rate fell to 3 yuan per dollar.If the price of a Chinese sweater was 120 yuan in both years, the new dollar price in 2011 would be and imports of Chinese sweaters would .